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Financing: Uses of Funds

The Problem

Every loan has the potential to be a little different, with a broad range of types, constraints, and parameters. These granular details matter but can be difficult to track and use effectively with simpler modeling methods and make software feature sets complicated to deliver.  When our product team scoped our financing engine, we came up with over seven methods that lenders use to model a Use of Funds.

Our Solution

Assess is equipped with a versatile financing interface that gives you control in inputting your loans parameters and specifying how it will be used, or its “Uses of Funds.” Will the loan be used to fund any shortfalls in the property’s cash flows? Financing fees? Assess makes it simple under a broad range of scenarios and uses the most conservative Use of Funds sizing approach, from a bank’s perspective.

Uses of Funds are critical because they correlate directly with the size of a loan’s total principal. For instance, if a lender is sizing a loan using the Loan to Cost (LTC) method, selecting more use categories might increase total costs, which in turn increases the required principal amount.

In Assess, you can set Uses of Funds in the Financing section with a series of toggle switches and specify how long you want the loan to fund these uses in the Duration field.

These flexible financing options let you easily input a wide array of loans that cover various project scenarios in a intuitive way.

Thanks!

Come see this feature in action at www.assessre.com. We’re excited for you to take a look and to hear your feedback. Sign up for our newsletter to stay up-to-date with our latest feature developments.

Feature Highlight: Tenancy Losses

The Problem

Current real estate financial models today have poorly understood “conventional” approaches to vacancy or credit loss adjustments. A common approach is to apply a discount of some constant percentage, regardless of the property’s occupancy; however, this approach could result in inaccurate or unintended adjustments.

Our Solution

Assess tackles inaccuracies of this common industry practice by allowing three options for both General Vacancy and Credit loss adjustments, all of which are accessed in the Tenancy Losses section of the General Assumptions page.

  1. “All Tenant Income”: This is the most common and simplest option. It reduces all scheduled income by a fixed percentage. For example, if a property has $1,000,000 of projected rental income and general vacancy of 10%, then Assess subtracts $100,000 of vacancy.
  1. “All Market Income”: This option works in the same way as “All Tenant Income,” but only reduces income scheduled from “Market” tenants (i.e. not “In-Contract”).
  1. “Dynamic Loss”: This option adjusts the vacancy deduction based on the percentage of rental income designated as “Contract” versus “Market.” Dynamic Loss selects the lesser of the actual percentage of the property’s income that is designated as “Market” and the specified “Dynamic Loss %.”

For example, a property’s Dynamic Loss percentage is designated as 5%, and its rental income is comprised of 90% Contract income and 10% Market income. Dynamic Loss uses the lesser of 10% and 5% to calculate a vacancy deduction – in this case, 5%. If this same property’s rental income is 98% Contract / 2% Market, then Dynamic Loss uses the lesser of 2% and 5% -in this case, 2%.

See how Assess handles vacancy or credit loss adjustments!

We’re excited for you to take a look by signing up and hearing your feedback. Sign up for our newsletter and follow us on Twitter @assessre to stay up-to-date with our latest feature developments.

Feature Highlight: Financing – Permanent Loan

The Problem 

Upon completion of underwriting a deal’s operational aspects, most investors will want to add financing to their investment to maximize returns. This can be complicated due to varying loan parameters and structures, but Assess makes it simple.

Our Solution

A permanent loan – a long term loan (10+ years) used to finance your property – is one of the primary types of financing that you can incorporate into your Assess models. A permanent loan commonly pays off a previous, outstanding long term or short term loan (e.g. a bridge, construction, or permanent loan).

Assess gives you a multitude of input options, including the ability to enter any number of loans in succession. This allows you to cover bridge to perm financing scenarios, refinance scenarios, and any other scenario requiring multiple successive loans.

To enter a permanent loan, add a new loan and select the Permanent button under “Type.” Contextual uses, sizing, and repayment input options will then appear for the new loan.

Inputting loan details

These intuitive input choices, including more specific options such as held back funding and debt yield loan sizing, support the precise modeling of a wide variety of loan types. To take a deeper dive into Assess financing features, visit our knowledge base.

See Permanent Loans in Action!

We’re excited for you to take a look by signing up and hearing your feedback. Sign up for our newsletter and follow us on Twitter @assessre to stay up-to-date with our latest feature developments.

Easy Imports from Argus DCF

Argus is counting down the days until it stops supporting Argus DCF, but Assess+RE has been busy building tools for the future.  A couple of weeks ago, we were excited to announce the launch of deal sharing, and today we introduce Argus DCF imports!

Our Argus DCF Import tool is designed to make the move to Assess as simple as possible.  With a simple drag and drop, you can now import existing property data into new projects on Assess.  All of the most time consuming inputs, including operating expenses, rent roll, acquisition and sale, address, rentable area, inflation, and vacancy losses, are automatically populated in your new Asses properties.  We’ve written easy guides for both how to export your projects from DCF and how to import those projects into Assess.  Each step takes only a few minutes, and allows you to migrate your business as quickly as possible.

Three easy steps:

  1. Prepare your Argus DCF files for Assess
  2. Import existing properties into Assess
  3. Update remaining assumptions and optional details, such as reimbursements and financing
  4. Reach out to Assess with any questions or to let us know what you think!

If you have an account, log in now and try it for yourself. If not, start a free trial today and check out how easy it is to make the move from Argus DCF. We can’t wait to welcome you to Assess+RE and show you how much time and money you can save doing your deals with us.

As always, we’d love to hear what you think – get in touch through the in-app chat or drop us a message at hello@assessre.com.

 

Deal Sharing: Collaboration that works for you

Today we’d like to announce the launch of a major feature on the Assess+RE platform: Deal Sharing.

Deal Sharing Tab

You asked for it, we built it

Following our launch we heard many new feature requests, but one was the most requested by far: deal sharing. Every modern deal involves the participation of investors, lenders, brokers, appraisers, and entrepreneurs who need fast and simple communication, reliable data security, and tools that are available to anyone on any device. You told us that it was about more than sending data around – it’s the most powerful tool that you need to manage your business, your investment opportunities, and your communications.

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Feature Focus: Vacant Space MLA, Renewal Probability, CAM Reimbursement Groups

Today we’d like to kick off a regular segment that highlights key features we’ve built for Assess+RE. Our product team is constantly thinking about ways to minimize frustration and time spent on inputting assumptions so you can spend more time analyzing your deals.

This week, we will take a look at three features: Vacant Space MLA, Renewal Probability, and CAM Reimbursement Groups.

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Real Estate in the Cloud: How is Assess so affordable?

When I meet real estate finance professionals who use the incumbent tools in our industry, their first question is always “Can Assess do X, Y, and Z?”. After I reply that it can, the next question is always “So how much does it cost?”. To their surprise, we are able to offer our product at a price an order of magnitude lower than any competitive product in the space, with plans at $100/month and $1000/year. This may seem implausibly low, especially for funds that have hundreds of millions in assets under management, but for us this is business as usual.

In this article, I’ll review how Assess+RE leverages cloud-based technology to do what no one else has managed to do: revolutionize financial modeling and underwriting while making it accessible to everyone, not just to the few who can afford it.

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